Accident, sickness and unemployment policies may be good for some people but they are not for everybody, as there are some limitations to ASU.
Therefore it is worth checking how ASU stacks up against other types of insurance, in particular income protection (IP), which for some insurance brokers, is a more comprehensive and therefore more useful long-term product.
The benefits of ASU
1) Freedom
For Jason Berry, ASU is a flexible product that gives the individual a lot of freedom, enabling people to carry on even if something unexpectedly bad happens.
He explains: “The great thing about ASU is the freedom it provides. Payment protection insurance and mortgage payment protection insurance will cover that one loan or mortgage, but ASU will give you a ‘salary’ so you can carry on with life in as normal a way as possible until you can get back to work.”
Kesh Thukaram, a founding director of Best Insurance, similarly waxes lyrical, claiming this cover is “ahead of the pack” for clients who need the sort of breathing space that the features of ASU can bring.
He states: “This is one of a few short-term, low-cost policies within the insurance sector that provides claimants with a regular income for up to a year.”
2) The ‘unemployment’ element
If worries over the economy or concern about a company’s profitability are concerning your clients, they might benefit from having some short-term unemployment protection in place. This is where ASU can be very useful.
Rob Harvey, adviser at Drewberry, comments: “Regarding the Unemployment Insurance aspect, it's generally seen as attractive because people tend to consider it the more tangible risk, possibly because it's less pleasant to think about the other risk: sickness.”
According to Mr Thukaram: “This gives people peace of mind that, in the event of redundancy – which can be stressful in itself – they do not have the additional stress of borrowing money to pay their bills.”
Moreover, redundancy or unemployment cover is a scarce commodity in the insurance world, as Jack Wild, adviser and company director at Jack Wild Consulting, explains.
He says: "The range of redundancy cover options in the UK market for advisers is very limited. Most of the large protection providers no longer offer any form of redundancy protection, which can be frustrating when advising clients.
“LV's MLP was a strong product with guaranteed rates, full IP and a maximum cover level of more than £4,000 a month, but it was unfortunately withdrawn from the market.
"The issue now is that most products available are general insurance products with annually reviewable premiums and lower benefit levels.”
